FCC Split as It Launches Internet Regulation Effort

By

Amy Schatz

Updated June 18, 2010 12:01 a.m. ET

WASHINGTON—The Federal Communications Commission on Thursday launched a formal effort to give itself the clear authority to police Internet-service providers by changing the way Internet lines are regulated.

One proposal under consideration would reverse a 2002 decision by the FCC that deregulated Internet lines and would essentially give the agency stronger authority to police Internet providers and prevent them from favoring their own traffic over that of rivals.

The FCC's five commissioners voted 3-2 at a meeting Thursday to launch its re-regulation effort, with the agency's two Republican members dissenting. The vote kicks off what promises to be a contentious debate about the government's role in controlling Internet traffic and access.

"It's not hard to understand why companies subject to an agency's oversight would prefer no oversight at all if they had the chance," FCC Chairman Julius Genachowski said Thursday, adding the agency hadn't yet reached a decision on what to do.

"We need to reclaim our authority," said Democratic FCC Commissioner Michael Copps. "I, for one, am worried about relying only on the good will of a few powerful companies to achieve this country's broadband hopes and dreams."

Rules for the Web

The FCC's Internet access regulation proposal would:

apply some "common carrier" phone rules to Internet lines

reverse FCC's decision to deregulate Internet lines in 2002

give the agency clearer authority to police broadband providers

allow the FCC to overhaul a federal phone-subsidy program to fund Internet lines

but wouldn't include rate regulation or require Internet providers to share their networks with rivals.

Consumer groups and Silicon Valley companies cheered the decision. They are concerned that large phone and cable companies could gain too much power over the Internet.

"The FCC must have the authority to set broadband policy," said Joel Kelsey, policy analyst for Consumers Union, the publisher of Consumer Reports magazine.

Satellite-TV provider Dish Network Corp., which uses broadband lines to deliver on-demand movies to subscribers, said it "strongly supports" the FCC's move because "a sound legal framework is absolutely necessary to preserve a free and open Internet."

Google
Inc.
said in a blog post that "broadband infrastructure is too important to be left outside of any oversight."

However, broadband providers are fighting the proposal, encouraging their allies on Capitol Hill to help them stop the move.

Verizon Communications
Inc.
called the FCC's action "a terrible idea" in a statement.
AT&T
Inc.
called it "troubling and, in many respects, unsettling."

The cable industry's lobbying group, the National Cable & Telecommunications Association, said it saw "little benefit to changing course and great danger in attempting to shoehorn modern broadband services into a Depression-era regulatory regime."

The FCC's two Republican members also spoke against the move, with Commissioner Meredith Attwell Baker saying that "industry alone will not solve every challenge and no commercial market is perfect, but I fear that a more proactive broadband regulatory approach would adversely affect consumers, competition, and investment."

Some congressional Democrats and almost all Republicans have sent letters of protest to the FCC about the move. However, the Democratic leadership in Congress is siding with Mr. Genachowski on the issue and is now considering legislation to update the nation's communications laws.

The FCC's decision to consider changing its regulation of Internet lines came after the U.S. Court of Appeals for the District of Columbia this spring questioned the FCC's ability to police Internet providers under its current method of regulating Internet lines.

The court said the agency overreached when it sanctioned
Comcast
Corp.
in 2008 for deliberately slowing some subscribers' Internet traffic. In response to that court decision, Mr. Genachowski proposed using a different part of the Communications Act—which was written for phone networks—to give the agency a more certain legal footing for regulating Internet lines.

Those "common carrier" rules include rate regulation and other standards. However, FCC officials say they plan to cherry-pick just a few parts of the law to apply to Internet lines.

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